Washtenaw County government will be working to erase a projected $24.64 million deficit over a four-year period from 2014 through 2017, with a target of eliminating a $6.88 million structural deficit next year. County administrator Verna McDaniel and her financial staff gave a budget briefing to county commissioners at their Jan. 16, 2013 meeting.
The county works on a two-year budget planning cycle. In late 2011, commissioners set the budget for 2012 and 2013. However, because state law mandates that the board must approve the budget annually, commissioners voted in December 2012 on a budget “affirmation” for 2013, making several adjustments to the $102.8 million general fund budget. This year, they’re beginning the two-year cycle anew, planning for 2014-2015, with a longer-term view through 2017.
At the Jan. 16 meeting, financial staff provided preliminary estimates that show a general fund deficit of $3.93 million for 2014, which translates to 45.9 full-time-equivalent employees. That’s followed by projected deficits of $4.88 million in 2015 (56.9 FTEs), $6.53 million in 2016 (76.4 FTEs), and $9.27 million in 2017 (108.1 FTEs). McDaniel stressed that the projected deficits reflect what would happen if no action is taken. In addition, the FTE figures were merely a translation to show how many employees would hypothetically be affected in order to balance the budget – it’s not a policy decision to have layoffs, she said.
The projections include an assumption of only minor increases – 1% annually – in property tax revenues, lower state funding, and the same level of fringe benefits for employees, with no across-the-board salary increases. However, the projections assume that step increases and longevity pay would be reinstated for union employees.
The budget presentation also included targets to tackle a $6.88 million structural deficit in 2014. If that happens, “we’d be done – we’d have no deficit” going forward,” McDaniel said. The goal is to generate an additional $1.2 million in revenue, reduce operating costs by $2.96 million, cut $100,000 from outside agency funding, and find $2.62 million in reductions to employee compensation and benefits. In that regard, McDaniel noted that 327 employees currently have what’s called a “Cadillac” health care plan. Under new federal health care laws, the county government will pay a 40% tax starting in 2018 if those plans remain in place.
McDaniel noted that for 2012-2013, the county overcame a $17.5 million deficit – but only about $7.3 million of that came from structural changes. Yousef Rabhi, the board’s chair, noted that even though the $6.88 million target is lower, the cuts will be a challenge because many services are already cut to a minimal level.
McDaniel also floated some questions that commissioners should consider in their upcoming deliberations: (1) Do current budget allocations have the impact that commissioners desire? (2) Should the general fund be used when there are federal/state revenue reductions in non-general fund programs? and (3) What community area(s) can the county least afford to impact any further?
The board has set a planning retreat for Thursday, Feb. 21 at 6 p.m. – to be held during its regular working session – to talk about budget priorities. Update: The retreat has been rescheduled for March 7 at 6 p.m.
This brief was filed from the boardroom of the county administration building at 220 N. Main in Ann Arbor. A more detailed report will follow: [link]